Time to throw a $1000 price target on Netflix too?

By Cody Willard

I got asked by a reporter the other day for a price target on Netflix. I told him, after a few moments thought, how about another $1000 price target if you’ll look out say five years or so.

Since I published 50 Stocks for the App Revolution back in November 2010, the stocks in the report have more than doubled the mid-single digit returns of the broader markets, but none has been a bigger winner than Netflix. And this summer, I’ve re-written and completely updated the original “50 Stocks for the App Revolution” eBook and we’ve just made it available to the public at AppRevolutionStocks.com. Subscribers to my TradingWithCody.com service, where I post all my personal account trades in real-time, get it for free.

At any rate, I personally continue to invest my time, reputation and money in the app/smartphone/tablet/cloud themes. We have had some huge home runs already in the app revolution, including good ol’ Netflix (can you call a company this young but this old “good ol’”?) from the new updated report. Here’s the fundamental analysis on Netflix in the report.

Netflix has finally fulfilled its namesake; for the first time, 2011 will see it deliver more movies via the internet than by mail. It is the unquestionable de facto standard for premium video content on delivery and has inspired the cable networks and even HBO, to imitate with their own streaming iPad apps.

Now at 20 million subscribers, Netflix projects it will be in 1 out of 10 homes American within two years time. While it is facing higher costs from content owners, its explosive growth and a potential overseas roll-out overshadows any financial road bumps. The cable operators are doing everything they can to stem subscribers from ‘cutting the cord’ and keeping only Netflix; in an act of desperation they are even letting delinquent customers pay later, just so they can that deny Netflix has gained ground.

Its success being so public and well-covered and its technology so-of-the-moment, the obvious benefits and growth of Netflix has made its stock a high flyer. It’s trading at 37x forward earnings and has run over every prominent short-er of the company. Up almost 500% in the last two years, Netflix will experience huge growth at the expense of traditional content delivery systems, and can format its service to be delivered as an App through any platform. Just be cautious on overpaying during any earning season ramp-up and pick your spots to build a position on pull-backs.

Revolution Investing rating: */10

To get my Revolution Investing analysis and rating for Netflix, Arm Holdings, Nvidia, Amazon, Akamai and 45 other app stocks some of which you’ve probably never heard of including which ones I think can go up 500 or more%, you can simply order the report today by visiting AppRevolutionStocks.com or by subscribing to TradingWithCody.com where you get all my books for free.

In the report, I give you some of my trademarked cut-throat Revolution Investing analysis including some history of the company, how it’s trying to position itself for the app revolution and how much I like or dislike the investment prospects for that company.

And for those of you who really just want a short hand rating system, don’t worry. I put a Revolution Investing rating from 1 to 10 on each stock.

Cody Willard writes Revolution Investing for Marketwatch and posts the trades from his personal account at TradingWithCody.com. At time of publication, Cody had no positions in the stocks mentioned in this article.

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About The Cody Word

Cody Willard writes the Revolution Investing investment newsletter for MarketWatch and posts the trades from his personal account at TradingWithCody.com He is the founder of WallStreetAll-Stars.com and the principal of CL Willard Capital. Cody serves as an adjunct professor at Seton Hall University and is on the University of New Mexico Alumni Board. He was an anchor on the Fox Business Network, where he was the co-host of the long-time #1-rated show on the network, Fox Business Happy Hour. Cody, a former hedge fund manager, and his stock picks and economic outlooks have been featured on NBC’s The Tonight Show with Jay Leno, ABC’s 20/20, CBS Evening News, CNBC’s SquawkBox, Jon Stewart’s The Daily Show, as well as in the Financial Times, Wall Street Journal, New York Times, and many other outlets.